Order Flow Specialization

I specialize in foreign exchange order flow, the money flow between nations, global macro of currency (to the extent that it affects the markets).

I always ask myself. Where is the money flowing? Why is the money flowing? What expectations are attached to this money? What are the pain tolerance points of this money? What will cause money(order flow) to go in and out? Where is the money going to flow in the future?

I focus mostly on the liquid currency pairs, with lower spreads. So I would generally prioritize analyzing EUR/USD as opposed to some exotic like GBP/NZD. But eventually you shouldn’t limit yourself. Because sometimes huge moves can occur in those less liquid pairs and result in some nice moves. Take EUR/NZD for example it posted a 2,500 pip move within 10 weeks.

In the beginning it can be time consuming to do many different currency pairs. But once you have the order flow generators for each pair, then the time spent goes drastically down. You don’t need to spend 12 hours per day order flow analyzing a single currency pair. If you are doing that consistently day after day for just a single currency, then probably you are focusing too much of your efforts on the things that do not generate order flow, and are useless. Although it takes time and experience to know what to look for.

I generally keep a running tally in my head of what the fundamental value of each currency pair should be based on what information is out there. Now in the end it doesn’t matter what I believe the value is, but what the people who are going to move the market believe the fundamental value is. So you need to harmonize yourself with what the people going to generate order flow believe the fundamental value of a currency pair is. You may not be able to get a price to a pip, but sometimes a general area can do just fine.

I keep a running tally of that fundamental value and if price deviates from that, then there is a potential trade setup, not always, but a potential trade setup.